Hinkley Point C Nuclear Power Station will save £40 billion in climate damages

This report published by PAL focuses on the proposed 3.2 GW Hinkley Point C nuclear power station. Its aim is to track direct and indirect carbon emissions over the total lifetime of the plant – cradle to grave – and to determine a more representative monetary impact in terms of the loss and damage caused by manmade climate change. The main findings are outlined below.

1. Hinkley C will save £40 billion in climate damages

As illustrated in Fig. 1, compared to a series of gas fired power plants with equivalent energy output and 60-year lifetime, gas at £62 billion exceeds Hinkley C at £37 billion, by 40%. For the gas equivalent, the cost of carbon alone approximates to the entire lifetime costs of Hinkley C. In other words Hinkley Point C Nuclear Power Station will save £40 billion ($59 billion) in climate damages.

As illustrated in Fig. 2, we also compare the costs of the nuclear option with the costs of various mixes of offshore wind with gas backup. Our findings are that the maximum gas to wind percentage for cost parity with Hinkley is 12%. There can be no more than 12% gas to offshore wind without the Hinkley C lifetime costs being exceeded.

It would be for the UK National Grid to decide if 12% of gas back-up covers the risk of the wind not blowing in sufficient amounts in wind farm areas. Given access to further and better particulars, say from EDF and the Offshore Wind Industry, we believe we can fine-tune this figure considerably.

Key Assumptions

The key assumptions for the report are

total budgeted whole-life costs for Hinkley Point C are £37 billion[1] ($54 billion).

operational costs and fuel costs are weighted pro-rata using published levelised costs of electricity for generating plants in the UK[3][4].

emitted carbon costs are provided on a consistent 60 year basis for all three alternatives using projected emissions[1] and the PAL Carbon 1 Year ND Index carbon price.

embedded carbon costs are provided on a consistent basis for all emissions associated with the manufacture of construction materials (steel, cement).

the carbon price changes over time as rates of global carbon emissions change.

This report compares like with like and does not speculate about developing technologies. This report does factor in the UK’s international obligation to account for carbon costs. Simply stated: the global, long-term damage done by a tonne of carbon emitted in the UK is and remains the UK’s responsibility.

Edward Coe is Managing Director and co-founder of PAL. He has extensive experience of systems development and implementation for advanced derivative trading systems utilising a broad range of technologies supporting in house, bespoke and third party software. Edward developed the software behind PAL Carbon.

Carbon Pricing Indices

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